Are Default Truthers Trying to Use Nixon’s Madman Theory on President Obama?
So now this is happening. Republicans have begun to organize around the premise that a default would not be catastrophic.
WASHINGTON — Republican lawmakers are voicing increasing skepticism about dire warnings that failing to raise the debt ceiling would result in catastrophic default.
“I would dispel the rumor that is going around that you hear on every newscast, that if we don’t raise the debt ceiling, we will default on our debt,” said Sen. Tom Coburn, R-Okla., Monday on CBS This Morning. “We won’t. We’ll continue to pay our interest.”
Coburn and other Republicans argue that the Treasury Department could prioritize interest payments while delaying others. The House has passed a bill requiring the Treasury to do just that.
That is plainly nuts. So nuts in fact, that something else must be at work. My guess is that the GOP has been backed into trying the Nixon’s “madman” gambit on the President. Here is the madman tactic as described by Wikipedia.
The madman theory was a primary characteristic of the foreign policy conducted by U.S. President Richard Nixon. His administration, the executive branch of the federal government of the United States from 1969 to 1974, attempted to make the leaders of other countries think Nixon was mad, and that his behavior was irrational and volatile. Fearing an unpredictable American response, leaders of hostile Communist Bloc nations would avoid provoking the United States.
Nixon explained the strategy to his White House Chief of Staff, H. R. Haldeman:
I call it the Madman Theory, Bob. I want the North Vietnamese to believe I’ve reached the point where I might do anything to stop the war. We’ll just slip the word to them that, “for God’s sake, you know Nixon is obsessed about communism. We can’t restrain him when he’s angry—and he has his hand on the nuclear button” and Ho Chi Minh himself will be in Paris in two days begging for peace.[1]
Similarly, the GOP is trying to bring Obama to the point of thinking, “for God’s sake, you know the GOP has descended into outright madness. We can’t restrain them and they are going to press down the nuclear button”
It is the only thing that makes sense to me right now.
I’d guess that a big part of the something else at work here is that plenty of Americans don’t know what increasing the debt ceiling means.
“More than twice as many Americans believe lifting the limit means authorizing more borrowing “for future expenditures” than believe it means “paying off the debts [the federal government] has already accumulated”
Awesome job media!
Or as Chuck Todd would say: a failure of the President to sell “facts”
Here is a slightly wonky explanation of The Dangers of Debt Limit Brinksmanship from Bruce Bartlett.
If a debt limit default is no big deal, then why would they use it as a negotiating chip?
They can’t have it both ways.
It’s not just Republicans.
Moody’s, who knows a little bit about bonds and debt service, knows Obama is full of sh*t too.
http://thehill.com/blogs/on-the-money/banking-financial-institutions/327487-moodys-treasury-would-keep-paying-interest-without-debt-limit-boost-
Moody’s *Investor Service* ? The same people who gave AAA ratings to toxic mortgage securities? The same people who — on September 24 — said:
Interesting, no? And while the US might prioritize paying interest to its creditors, a debt default jeopardizes the US dollar as the world’s reserve currency. Certainly if a percentage of the countries who are holding Treasuries just because they are the safest instrument on earth decided to cash in after a default, the US certainly couldn’t pay all of that principal back.
But hey — short term T-bills rates are spiking up as in the VIX. You can take what Moody’s *Investor Service* says at face value (like many others buying toxic assets have) or you can watch the market signals. If you can.